What is the Maxed Out Credit Card Penalty?

Why is this important?

  • A single credit card over 90% usage is considered MAXED OUT
  • This can cause your credit score to drop 80+ points
  • Even a card with a $300 limit and a $270 balance is considered 90% MAXED OUT
  • Carrying ZERO balance and keeping the card on AutoPay is the easy way to avoid this penalty
  • Below are two examples of maxed out cards and the quick recovery after paying the balance in full

This penalty can go away fast

  • Carrying ZERO balance and keeping the card on AutoPay is the easy way to avoid this penalty
  • Paying the card down 20% can make most of the penalty go away fast
  • Example: Card with a $300 limit and a $290 balance, paying $150 on the card will gain back about 75% of the points
  • If you have a large balance in the thousands of dollars, schedule a 1on1 with your Rental Kharma mentor to discuss a plan

Maxing out more than one card

  • Yes this can compound the penalty and depress your score even more
  • Your better off to have 1 card with a higher limit than many cards with low limitsThis can prevent multiple penalties for what is the same life event

This graph show you how over usage can bring down your credit score

How late payments affect your credit score